13 Reasons Why Trip Cancellation Insurance Is A Waste Of Money
Our research team spends a lot of time reading what other people think about travel insurance companies, and a common complaint revolves around trip cancellation insurance. There are some circumstances where people are not covered by their trip cancellation insurance, and it is fair to say that it often comes as a surprise to the buyer (to say the least). For example, if your holiday company goes bust, your trip cancellation insurance will not cover it. Trip cancellation insurance is not a cure-all policy because it has a fair number of limitations and restrictions that many people are unaware of. We have listed a number of things that trip cancellation insurance doesn’t cover.
Trip Cancellation Insurance Doesn’t Cover – If Your Holiday Company or Airline Goes Bust
It seems very unfair, but if you think about it, no travel insurance company would offer cover for if your holiday company went bust. If it did, then a holiday company could sell thousands of cheap holidays, go bust, and then leave the insurance companies to pick up the pieces. No insurance company is going to risk paying the price for a holiday company’s financial maleficence. However, as a customer, you lose out on any payments or deposits you have made to the holiday company or airline, and there is nothing your travel insurance can do about it. At best, you will have to fight the bankrupt airline or holiday company for your refund.
Trip Cancellation Insurance Doesn’t Cover – If You “Didn’t” See A Doctor Before Canceling
Personal Injury – Let’s say that you feel a twinge in your back at work, so you take a few days in bed but the pain gets worse. You cannot make your trip because you are in too much pain, so you cancel your trip, and book an appointment with your doctor to be seen in five days (if you are lucky). You didn’t see a doctor about your back before you canceled your trip, there is no record of you visiting your doctor about your back before you canceled your trip, so your claim under your trip cancellation insurance is denied.
Illness And Missing Your Flight – The same is true if you are ill and decide not to go on your holiday, and then try to claim for your trip. Once you miss your flight, or once you cancel your flight, you are unable to claim. You would have had to visit a doctor first, and then cancel your trip/flight, and then make a claim.
Traveling Companion Cancellations – If you are traveling with a companion or immediate family member, and that person becomes ill, then you may be able to cancel your trip as well as your traveling companion’s trip and still make a claim. However, a doctor must examine your traveling companion and/or yourself before the trip is canceled and before a claim is made.
Different Travel Insurance Polices – Different travel insurance companies have different policies regarding when your doctor examines you or your traveling companions. For example, Allianz travel insurance will pay out if your doctor recommends canceling your trip before your trip is due to start. If you are ill/injured as your trip is set to begin (before you set off), then Allianz will pay out if a doctor examines you or your companion within 72 hours (3 days) of your trip being canceled.
Trip Cancellation Insurance Doesn’t Cover – People Who Fail To Get All Their Documentation In Order (Poor Filing Etiquette Or Poor-Quality Submissions)
Most of the large travel insurance companies will not deny your claim outright if you do not have your documentation in order, but you can expect a very long and extended process if you do not fill out your forms in full and/or if you do not have everything that is needed right away. For example, the previous section mentioned trip cancellation due to illness, in which case you will need to submit a fully completed Physician Statement form, and then show that you canceled your trip, and show that you were not refunded in any way. You also need to prove that one of your other insurance policies is not eligible to pay you.
Get your paperwork and evidence together, get it signed, and then finalize your claim. Get everything together and submit it. There is a fine line between having your documentation in order, and having pieces missing from your claim. For example, you may have submitted all the receipts for your trip, but you didn’t show how you paid. Your insurance company may deny your claim, but they may simply come back and ask how you paid. This makes the process longer and more painful.
Do not confuse having your documentation in order with missing pieces of documentation. For example, submitting the claim without correctly filling out your illness related questions may result in it being sent back to you, but submitting your claim without a doctors note (Physician Statement form) will result in denial.
Trip Cancellation Insurance Doesn’t Cover – Any Claim Where A Single Piece Of Evidence Is Missing Or Incomplete
Do Not Make The Mistake Of Thinking Your Insurance Company Will Chase You – It is in poor taste if an insurance company denies your claim because you didn’t tick the “No” box under the “Are You Disabled?” question. Most insurance companies will chase you for such details….but some of them will not. If your claim is missing any form of evidence, then your travel insurance company has the legal right (albeit not the moral right) to deny your claim. You may have proof that the airline didn’t refund your money, but if you forgot to include it, then your travel insurance company will deny your claim.
Send All The Proof You Have – There are people who are denied their claim because they submitted a credit card receipt for the payment they made to the company. As you know, a credit card receipt shows the buyer, recipient, date and the total, but no other details. The insurance company needs to see credit card receipts, payment receipts, regular receipts, invoices and maybe even copies of your bank or credit card statements. Send as much proof as you can so that the insurance company has a harder time rejecting your claim.
Send Everything (Copies or Otherwise) That You Have Relating To Your Trip Cancellation Costs And Reasons – The insurance company should send you an itemized list of the things they want. They shouldn’t just ask you to figure it out for yourself. However, here is a list of the sort of things you will need to send if you want to increase the chances of you being paid for your claim.
- Unused tickets (originals)
- Any copies of your invoices
- Proof of payment (try copies first unless otherwise asked)
- Documents that substantiate your costs
- Documents that substantiate your version of events
- Any proof that your trip cancellation or trip interruption actually happened
- Itemized bills for what you paid out for your trip
- Itemized bills for any extras you had to pay out (they may help substantiate your version of events)
- Receipts for all expenses including anything related to the trip you are claiming for
- Trip cancellation/interruption claims (forms and associated paperwork)
- Copy of any resort invoice or vacation contract and/or confirmation
- Original proof of expense allowances received from your travel agency, tour operator, property management company, common carrier, resort, or other entity
- Original proof of refunds received from any entity relating to your trip
- Documentation of refunds received from your common carriers or travel supplier(s)
- Proof that your other forms of insurance are not liable to pay (For example, does your medical insurer cover trip cancellation due to illness?)
- Documentation that proves (officially) the cause of your trip cancellation or trip interruption
- Any explanation for your medical diagnosis (if required)
- Any itemized bills directly relating to your reason for canceling (such as medical bills if you canceled due to illness)
- Original itemized bills, proof of other insurance payments and receipts relating to your reason for canceling
- A copy of your supplier’s paperwork that describes the penalties you incurred (even if you are not claiming for them)
- Proof from your supplier/travel agent/etc. Showing all non-refundable items, costs and amounts
Trip Cancellation Insurance Doesn’t Cover – Your Claim If Another Party “Can” Pay (Even If The Other Party Won’t Pay)
If Somebody Else Can Pay, Then Your Travel Insurance Won’t – Your travel insurance company will always work to be the very last company holding the bag. People have had claims denied because part/all of the costs can be recovered from their home insurance, life insurance, medical insurance, credit card insurance, and vehicle insurance. If there is even a chance that the holiday company or airline will pay out, then your travel insurance company will not pay. Even if you try your holiday company and they refuse to refund your money, your travel insurance company will not step in and make them, nor will it step in and pay you.
Check To See Where You Are Already Covered – We have seen mind-boggling reasons why people have been denied travel insurance claims. A reason why people are denied claims is because people are already covered by another policy. For example, one gentleman couldn’t claim for his trip being canceled because his company insured him and the travel insurance company said his company should pay. Before you buy travel insurance, check to see where you are already insured. For example, we have seen credit cards that offer partial auto-accident insurance and/or flight luggage insurance. There are some medical policies that cover trip cancellations due to ill health. The hard truth is that your travel insurance company can deny your claim because they say another company should pay you. Even if the other company doesn’t pay you, the travel insurance company will still deny your claim because the other company should pay (even though it didn’t). You can end up with nothing from both the supposedly liable company and the travel insurance company.
Trip Cancellation Insurance Doesn’t Cover – If You Give Up On Your Trip A Little Too Easily
You Cannot Give Up On Your Trip Without Showing Good-Faith Effort – I admit that this point is probably one of the most unfair because there are plenty of people who try to continue on with their vacation or try to rescue their vacation and are then told they should have given up on it a little earlier. If you are delayed, and even if you miss a chunk of your vacation because you are delayed, you are often told you shouldn’t give up on your vacation. You will not receive anything from your travel insurance company if your trip is delayed and if you miss part of your vacation because of delays (they want you to buy trip interruption insurance for that sort of thing). If you are delayed and you lose part of your vacation, you can cancel the whole vacation if you wish, but there is a very strong chance that your travel insurance company will not pay your claim for a full or partial refund.
The Line Between Trip Interruption And Trip Cancellation Is Blurry – If your trip is delayed and you miss part of it, or even if you miss an appointment because of delays and there is no point in going on your trip, you will not be paid if you cancel. If you buy trip interruption insurance, then you may be paid if you are delayed and push through to continue with your trip. However, you are only paid certain amounts. This means if you miss a million dollar meeting because your plane was delayed, you cannot make a claim. You are paid limited amounts for cancellation, and even further limited amounts if you take out travel interruption insurance. For example, we found a trip interruption deal where they offer up to $800 in travel delay cover, up to $800 in missed connection cover, and up to $300 in baggage delay coverage to reimburse you for meals, lodging, and various other expenses.
Trip Cancellation Insurance Doesn’t Cover – You Purchased Your Trip Cancellation Insurance When Trouble Was Looming
Don’t Expect An Insurance Company To Advise You About The Claims You Won’t Win – Maybe you book a vacation in Miami when a named tropical storm is heading towards Miami. If you purchased your trip cancellation insurance after storm was reported, then you will not be able to claim for trip cancellation if you decide to cancel your trip, or if your airline will not fly you into the area, etc. Travel insurance companies will happily sell you policies that they know you cannot claim on, so do not expect them to do the honorable thing and warn you. If trouble is looming, they will still sell you insurance while also being aware that any claims you make will be denied. Trip cancellation insurance only covers you against unforeseen or sudden events.
Buying Before The Event – If you buy before the event is named or reported, then you may be able to claim. That is why your travel insurance company will advise that you buy trip cancellation insurance well in advance. However, the more unforeseen an event is, then the less trustworthy your insurance company becomes. For example, if you are insured for trip cancellation due to terrorist attacks within a certain radius of your location, your insurance company may start wriggling if rising tensions were being noted in the news just before you bought your insurance. In other words, if something unforeseen happens, then your travel insurance company will only pay out if it is a complete surprise.
Trip Cancellation Insurance Doesn’t Cover – Things Outside Of The Terms And Conditions
The Most Common Reasons For Surprising Denied Claims – Online articles always tell you to read the small print, even though the writers of the same articles have never read small print in their lives. You have to understand that your trip cancellation insurance is not “Cancel For Any Reason” insurance. Your policy should list all the acceptable cancellation reasons if you want your claim to be paid. For example, I read the Allianz terms and conditions on the policy we bought, and there were 26 listed-acceptable reasons for a cancellation. On our test policy with AXA, we found 25, and with AIG we found 26 (albeit oddly listed to seem like more) acceptable reasons for a trip cancellation.
We Can’t Help You With Specifics, So You Will Have To Hunt Them Out – We wrote this article so that readers could avoid nasty surprises when they for trip cancellation insurance claims. We wanted to show people what is and isn’t covered. However, each travel insurance company is going to have its own set of acceptable reasons for a cancellation. Some are more common than others. For example, many of the insurance companies we have reviewed will allow you to cancel your trip if your traveling companion dies, but not if your pet traveling companion dies. Many will allow you to cancel if you are called for jury duty after your travel insurance plan’s effective date, but none of them will cover you if you cancel your honeymoon because your fiance ran off with a Mexican Olympic swimmer.
Trip Cancellation Insurance Doesn’t Cover – The Financial Insolvency Of A Travel Supplier
You may have heard of travel insurance companies that will pay up if a travel supplier goes bankrupt. However, many people complain because their claims are not paid. If your travel insurance company states that it pays out if your trip is canceled because of your travel supplier’s insolvency, then make sure you get it clarified and verified. Very few travel insurance companies will pay out with their basic plans. If you want to be paid if your travel supplier goes bankrupt, then you will probably have to buy a premium (more expensive) trip cancellation insurance policy. No matter how the an agencies promotional material puts it, you need to get it verified and in writing because insurance companies shy away from paying up when a travel supplier goes bust.
Trip Cancellation Insurance Problem – Covering Less Than Expected
A common reason why people say trip cancellation insurance is a waste of money is because they get far less coverage than they expected. We have known fair and unfair examples of this. A fair example was where we have seen people who buy the basic plan and then complain online because the cover is light and inflexible, (what did they expect for the lowest priced plan?). We have seen examples where people have bought travel insurance that doesn’t actually offer any monetary compensation for things such as lost valuables and trip cancellations. One could suggest that you read the fine print, but doing so is tricky since most companies offer the fine print after you cover completed 75% of the sign up. Reading articles like this one helps to teach you about coverage specifics so that you know what to look for and/or what to ask about.
Trip Cancellation Insurance Problem – Taking Out Insurance Without Knowing Why
Many people have no idea what their trip cancellation insurance (or travel insurance) actually does. Many people buy travel insurance because they feel better with it and not because of what it covers. In reality, people should buy travel insurance to cover the cost of unforeseen medical emergencies while abroad (because overseas medical care can cost a fortune), and people should buy things such as trip cancellation insurance and/or trip interruption insurance if their trip is very expensive and they do not want to risk a complete loss of the money they have spent.
Trip Cancellation Insurance Doesn’t Cover – When You Cancel A Trip Due To A Preexisting Injury Or Medical Issue/Complaint
I touched upon how travel insurance companies will not pay out if you cancel your trip due to a preexisting medical issue or complaint, but I thought I would clarify it because of an unfair review I saw online for AIG. In the image below you see a user review lifted from a travel insurance review website.
It Is Worrying How Many People Found That Review Helpful – The reviewer obviously feels cheated, but her complaint highlights why they refused her claim. She said that the company gave her different reasons for his rejection, which from her perspective makes the company appear unreliable. However, the truth is that there probably were several reasons why her claim was rejected. If she hurt her back just before the trip, did she see a doctor and maybe the injury was not severe enough to warrant her canceling her trip. Since she says “Back Problems” rather than a “Back Injury,” one may assume that her back was already causing her trouble, which makes it a preexisting medical issue.
Do Not Believe All That You Read – The reviewer claims to have spoken to the president of the company, which seem like a lie, and the reviewer also claimed she spoke to eight different AIG travel staff, which suggests she was repeatedly calling and having the same conversations rather than following through with her claim and following the claims process (including the adhering to the waiting times). Also, her accusation that misinformation was given to the NYS Dept. Of Finance by AIG is unlikely because why would AIG risk the fines and negative publicity for the sake of saving a few hundred dollars?
On The Other Hand – One may side with the reviewer if she told the insurance agent that she had preexisting back problems prior to buying the insurance and the agent didn’t inform her that she wouldn’t be paid for a back-related claim. We have no way of knowing if she was led to believe that she would be paid for her preexisting medical problem.
Trip Cancellation Insurance Doesn’t Cover – Travel Vehicle Maintenance And/Or Short Weather Delays
Short Weather Delays – If your plane is delayed for a few hours because of bad weather, and if this means you have to miss the first day of your vacation, then that is not covered by trip cancellation insurance; such things are usually covered by trip interruption insurance. Some people are surprised by this fact because most trip cancellation insurance companies say that you can claim for bad weather. However, it has to be bad weather that results in you canceling your trip because the delay holds your plane up for so long that you miss your vacation/trip. You cannot cancel for weather delays and then make a successful claim unless the weather had such a severe impact on your trip that you were forced to cancel. For example, if you were delayed for seven hours on the airplane and then you couldn’t check into your hotel for your one-day trip, then that would be a legitimate reason to cancel. Do not forget that the weather delay has to be serious enough to warrant you canceling your entire trip.
Vehicle/Plain Maintenance – Many trip cancellation insurance policies will not cover travel vehicle maintenance, which means if you have to cancel your trip because your plane needed extra repairs or because your coach broke down and there wasn’t another coach for days, then you do not get your money back. Insurance companies do not pay for things such as travel vehicle maintenance because they would end up paying out for every low-cost-shyster company that didn’t take care of its vehicles. It is up to the consumer to pick a travel company (or means of transport) that is reliable. Some travel insurance companies will cover you for maintenance issues, but such coverage is usually only available with premium (higher priced polices).
Final Thoughts On Appeals – Appeals Are Rarely Accepted And Won
You may decide to appeal the decision to deny your claim, but the fact is that most appeals fail. In many cases, they fail because there is a catch 22 in play. Firstly, if you change your story and/or your reasons for claiming between the time you are first rejected and the time you appeal, then the company will simply say your policy doesn’t cover your claim (or something vague and simple). If you keep your original story, then your appeal will be rejected again unless there is new and verifiable evidence that you simply couldn’t get your hands on prior to the appeal.
People often try to change their story or their reason for a claim just prior to an appeal. For example, somebody will be rejected because the rental property that blew away was not covered through the policy, so the claimer tries to change her story prior to the appeal by saying the storm was the reason why she should be paid. In most cases, it does not work because either the company will say that whatever you are claiming on is not part of the policy. Secondly, you have to win the appeal on the grounds you originally claimed. You cannot create an appeal and then create a different story to fit the terms of your policy.